Euro Weakens Against Pound as Oil Rally and BoE Rhetoric Pressure EUR/GBP

Key Moments

Macro Drivers Hit EUR/GBP

The Euro (EUR) was unable to sustain an advance above the 0.8610 barrier against the British Pound (GBP) on Monday, with EUR/GBP sliding back toward intraday lows at 0.8690 at the time of writing. Sentiment remained fragile following the US rejection of Tehran’s ceasefire proposal, a renewed climb in Oil prices, and a more hawkish stance from the Bank of England (BoE), all of which exerted pressure on the common currency.

BoE Governor Andrew Bailey stated on Friday that it is becoming increasingly difficult to keep interest rates unchanged while price pressures remain elevated. These remarks echoed earlier comments from Deputy Governor Clare Lombardelli and reinforced expectations that the BoE could proceed with further policy tightening despite soft economic momentum.

Geopolitical Tensions and Oil Strength Undermine the Euro

The situation in the Middle East remained highly uncertain after the rejection of the latest proposal to cease hostilities and reopen the Strait of Hormuz. Against this backdrop, Oil extended its gains, with Brent crude trading above $98.00 per barrel, after recovering from Friday’s lows at 96.40. The renewed advance in Energy prices added to the strain on already challenged Eurozone economies, further weighing on the Euro.

Technical Picture: Sellers Take Control Below 0.8600

EUR/GBP was last seen around 0.8591, still confined within an upward parallel channel, but with selling interest increasing after the failure to hold above 0.8600. On the 4-hour chart, the Relative Strength Index (14) slipped below the 50 mark, signaling waning bullish momentum. At the same time, the Moving Average Convergence Divergence (MACD) edged slightly below the zero line, accompanied by a softening histogram.

On the downside, sellers were pressing against the September 24 low at 0.8592, with an eye on the cluster of lows from September 18, 19, and 22 in the 0.8570 region. Below that, the lower boundary of the ascending channel near 0.8560 was seen as the next potential support.

On the upside, initial resistance remained at the 0.8610 channel top. Above that, the late June highs near 0.8630 stood as the next hurdle, followed by the June 26 spike high at 0.8650, which was viewed as a possible upside target.

Euro Performance Versus Major Currencies

The table below reports the percentage change of the Euro (EUR) against key major currencies today. According to the data, the Euro showed its strongest performance versus the Australian Dollar.

The heat map referenced in the original analysis illustrates percentage changes between major currency pairs. In that framework, the base currency is chosen from the left column and the quote currency from the top row. As an example, selecting the Euro on the left and moving horizontally to the US Dollar cell would display the percentage change for EUR (base)/USD (quote).